5 best ways to cut insurance costs

Save on five types of insurance

Think you’re paying too much for insurance? Then do something
about it! You might easily forget that insurance
costs aren’t necessarily fixed, and getting the most policy for
your money is worth checking out. All you’ll need is extra time and
the tenacity to pepper your agent with knowing questions. But the
payoff can be big — deciding to cut insurance costs can result in
as much as 20 percent in savings.

These days, the odds favor consumers. Most insurers are in
heated competition with each other. That means you’re likely to get
insurance breaks for most types of insurance, such as home and
car.

That said, here are our best tips for cutting costs on five
types of insurance: car, home, disability, health and life.

Homeowners insurance: Go for
discounts

“There are five to 10 discounts on house
insurance that people aren’t aware of,” says Don Griffin, vice
president of personal lines for Property Casualty Insurers
Association of America. For example, he says, insurers offer
discounts for homes built to higher building codes.

Other discounts include one for groups, such as professional
organizations, and another for people over 55 that can slice up to
10 percent off your premium. Discounts for safety improvements for
installing deadbolts or smoke detectors can pare another 5 percent
off premiums. Also, loyalty pays off; your insurer may lower your
payments 5 percent if you’re a long-term client.

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All discounts vary from state to state and among companies,
though. So it pays to get three to four quotes
online from different insurers, says Griffin.

Auto: Is your new car an insurance
hog?

Most people buy car
insurance backward: buying the car and then considering
insurance costs. That can be costly.

“Before you buy, compare
insurance costs for different cars,” says Claire Wilkinson,
author of the Terms + Conditions blog for the Insurance Information
Institute. “Their insurance costs vary, based on the likelihood of
theft, etc.” Once you know your insurance costs, you can ask
yourself another key question: Is it within my budget?

After kicking a car’s tires, check out its safety at the
Insurance Institute for Highway Safety’s website, says Griffin. “In
most cases, (having a safer car) will lower your insurance costs,”
he says.

Health: Mix and match policies

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In insurance, one size doesn’t fit all. And that includes one
health insurance policy per family.

“People don’t realize they can mix and match policies within
families,” says Carrie McLean, a consumer specialist at online
insurance broker eHealthInsurance.com. “Perhaps one member of the
family needs more care, such as preventive care, and others
don’t.”

For example, she says, it may be cheaper to buy an individual plan for a child than include him or her
in a family plan.

The downside, she says, is that family members may go to
different hospitals and doctors. “But it’s saving you money in the
long run,” says McLean.

Know your budget for the coming year, says Susan Pisano, a
spokeswoman at America’s Health Insurance Plans, a trade group. Do
you have a chronic condition? Do you want to have a baby? Do you
have a lower premium and need higher cost services? Make sure to
get your preventive services, Pisano says.

Disability: Join group plans

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Disability insurance can be expensive, so
it pays to cut corners when you can, though the options are
limited.

“It’s harder to save money on disability than other kinds of
insurance,” says insurance expert and blogger Byron Udell, the
founder of AccuQuote in suburban Chicago. “Group plans are much
less expensive.”

Basically, disability policies are priced by two components:
waiting periods before benefits begin and actual benefit periods.
Rejiggering either option can lower your policy costs, but Udell
doesn’t recommend it. For example, lengthening the policy waiting
time from, say, 90 to 180 days only saves 5 percent on a premium,
he says.

Life: Term insurance is a better
buy

The savings come from buying a limited-time term policy instead
of a more expensive permanent life insurance policy. Then, invest
the difference. “Half of the life insurance policies sold are
dropped,” says James Hunt, a life insurance actuary with the
Consumer Federation of America. “They’re too complicated.”

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If you do need life
insurance for the long haul, though, opt for a multicarrier
broker and shop around. “Half the time people are paying more than
they need to,” says Udell.

Additional resources

Click on the links below for more helpful information about
insurance.